Novell’s Open Source Evolution: a case study in adapting open source business strategies

Abstract

Novell International was a leading network operating system provider in the 1980’s and 1990’s. In the mid 1990’s Novell lost market share in the network operating system market. To counter this loss, Novell made a strategic decision to go open i.e. to make use of open standards and open source business strategies. Since then Novell has managed to successfully change from being a proprietary network operating system provider to being a leader in Linux and open source solutions. Its primary business model makes use of a subscription strategy, selling subscriptions to its Linux desktop operating system called SuSE. This has been instrumental in turning their business around. For example, comparing the financial results of Novell’s fourth quarters of 2004 and 2005 shows an increase of 418% in Linux revenue to $61m. Novell has proven that this open source business strategy is feasible and profitable.